India, Russia working on roadmap to circumvent new US sanctions

MEMBER

NEW DELHI: India and Russia, with proposed defence projects worth over $12 billion hanging in balance, are working on a road map to get around the new US sanctions regime that seeks to deter countries from buying Russian weapon systems.

"There are ways to get around the new financial sanctions flowing out of the CAATSA(Countering America's Adversaries through Sanction Act) enacted by US Congress. Consultations are in progress at several levels with the Russian government to devise a road map for it," said a top government source on Monday.

The Indian security establishment is quite upset at the US state department's move on April 6 to notify 39 Russian entities, including the state-controlled arms exporter Rosoboronexport, with which India does regular business. Any third party that conducts "significant transactions" with these 39 entities is liable for punitive sanctions under CAATSA.

The move has already led Indian banks with "exposure to the US" to suspend payments and instalments to Russia, though US defence secretary Jim Mattis in recent days has argued for "national security waivers and relief" from CAATSA for countries like India.

"On the one hand, the US wants India to be its closest strategic partner in Asia Pacific as a hedge against China. On the other, it is jeopardising our proposed acquisition of S-400 air defence missile systems from Russia as well as frigate, submarine and helicopter projects. It will also reinforce suspicions in India about the US not being a reliable longterm arms supplier," said another source.

Though Russia has notched up military sales worth $65 billion to India since the early-1960s, the US has cornered a major chunk of the lucrative Indian arms market by bagging deals worth $15 billion just since 2007 and is also eyeing several new projects.

India, of course, has consciously diversified its arms imports due to Russia's propensity to not stick to delivery schedules, jack up costs mid-way, create technology transfer hurdles and provide unreliable spares support.

But it's equally true that India needs to maintain its huge inventory of Russian-origin weapon systems, which can be adversely impacted by US sanctions. It also recognizes that only Russia will help it with "strategic projects" like nuclear-powered submarines.

India may have virtually rejected the mega joint production of the fifth-generation fighter aircraft called Sukhoi T-50 or PAK-FA with Russia, but several other critical defence projects are in the pipeline, as earlier reported by TOI.

Negotiations for the $5.5 billion acquisition of five S-400 Triumf air defence missile systems, which can destroy hostile aircraft, stealth fighters, missiles and drones at ranges up to 400 km, for instance, are in the final stages now.

Then, there are also the acquisition cases for four Grigorivich-class stealth frigates (around $4 billion) and joint production of 200 Kamov-226T light helicopters (about $1 billion) as well as the lease of a second nuclear-powered submarine after INS Chakra for around $1.5 billion.